Question
I would like to start investing on a monthly basis into a stocks and shares ISA. Pleas could you advise on the best platform to use in terms of low charges, good selection of funds and ease if use.Answer
In simple terms there are currently two different models of how platforms charge customers.
The first is to charge a fixed annual amount for the use of the platform with dealing fees usually applied to funds too. This is often the best value for larger portfolios, especially if you don't trade funds that often.
The other is to charge a percentage amount (either directly or via retained commissions) based on the value of investments you hold, with dealing fees seldom applied to funds. This is usually the cheaper route for smaller sums.
You don't really want to pay dealing charges on monthly fund savings, even though some platforms offer a £1.50 monthly dealing option, and fixed annual platform charges tend only to become cost effective when investing c£50,000 or more, so the latter percentage route is likely to be your best option.
Charles Stanley Direct offers nice, clean, pricing - that is low cost funds without commissions/platform fees built in and a 0.25% annual charge. Fund research is still a bit thin on the ground, as it's a new entrant, but this may improve in future. TD Direct Investing offers a similar deal, but with a higher 0.35% annual charge. Bestinvest still uses old school pricing, that is it receives commission (usually via higher fund charges) and rebates some to customers, but should still be fairly competitive in this scenario and offers good fund research and tools - the same holds true for rPlan. Cavendish Online also uses the commission rebate model and offers few frills, but tends to be cheap and uses the proven FundsNetwork platform.
The main consideration when using platforms/discount brokers who currently still receive/rebate commission is that their pricing model will need to change by 6 April 2014 (6 April 2016 for existing customers who don't switch funds/increase regular saving amounts), so there's a risk it could become less appealing for regular savings, although probably not something to lose sleep over.
I would like to start investing on a monthly basis into a stocks and shares ISA. Pleas could you advise on the best platform to use in terms of low charges, good selection of funds and ease if use.Answer
In simple terms there are currently two different models of how platforms charge customers.
The first is to charge a fixed annual amount for the use of the platform with dealing fees usually applied to funds too. This is often the best value for larger portfolios, especially if you don't trade funds that often.
The other is to charge a percentage amount (either directly or via retained commissions) based on the value of investments you hold, with dealing fees seldom applied to funds. This is usually the cheaper route for smaller sums.
You don't really want to pay dealing charges on monthly fund savings, even though some platforms offer a £1.50 monthly dealing option, and fixed annual platform charges tend only to become cost effective when investing c£50,000 or more, so the latter percentage route is likely to be your best option.
Charles Stanley Direct offers nice, clean, pricing - that is low cost funds without commissions/platform fees built in and a 0.25% annual charge. Fund research is still a bit thin on the ground, as it's a new entrant, but this may improve in future. TD Direct Investing offers a similar deal, but with a higher 0.35% annual charge. Bestinvest still uses old school pricing, that is it receives commission (usually via higher fund charges) and rebates some to customers, but should still be fairly competitive in this scenario and offers good fund research and tools - the same holds true for rPlan. Cavendish Online also uses the commission rebate model and offers few frills, but tends to be cheap and uses the proven FundsNetwork platform.
The main consideration when using platforms/discount brokers who currently still receive/rebate commission is that their pricing model will need to change by 6 April 2014 (6 April 2016 for existing customers who don't switch funds/increase regular saving amounts), so there's a risk it could become less appealing for regular savings, although probably not something to lose sleep over.
Read this Q and A at http://www.candidmoney.com/askjustin/874/best-platform-for-regular-fund-isa-saving
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